We all see the excitement brewing in markets. Alts are said to be in a full-on bull run. Bitcoin has tripled its previous all time high. Litecoin and Ethereum are essentially following the same recent peaks.
As the assumed top 3 coins, Bitcoin, Ether and Litecoin tend to define, on average, the majority of all trading volume in crypto, while alts are in fact starting to lean more and more heavily on that percentage. One of the extremely important aspects of value that investors seek in crypto are the model shared by Bitcoin and Litecoin, with a limited cap. There is a finality to the number of coins ever to be minted. But, Ether, as huge as it is, does not have this same cap, though it has been discussed numerous times. Does that mean that the same kind of pumps will eventually scale differently for ETH than the other two giants?
This is just one of many questions that the future holds for Ethereum.
The thing that most would say Ether has in its corner, beyond the smart contracts and thousands of tokens it now serves, mostly ERC-20 but the "fun" in "non-fungiles" is going to spread that out more among the various protocols, is the fact that it is designed to be flexible, programmable, and useful for a wide array of computational wonders beyond just solutions in finance. It isn't that other platforms are incapable of doing so, but Ethereum has designed their coin specifically to make that world of crypto easier, accessible, and programmable. All of this speaks to the future direction of Ether, because a number of upgrades are believed to be necessary for it to scale properly. This pathway is known as a multitude of careful steps called Eth2.0.
This page here is the source I'm using, and this is a very, very, very brief overview of what it has to tell us.
There are 3 main areas that Ethereum is focusing on to make Ether a better future-thinking product. They are: scalability, security, and sustainability, and since that makes for a 3-S solution, that has to mean its "S"pecial!
As I mentioned, this is a very, very, very brief overview, and my thought process for this particular post is simply this; if Eth2.0 is successful, how does it position Ether and its future value compared to other top coins? That is an impossible question to answer, especially because... you know... this is crypto, and crypto is wack! But, the answer to a successful target path is definitely well outlined.
First, the all-important scalability factor. ETH needs to be able to handle more transactions. It needs to be able to process them faster. It needs to be able to transact a lot, quickly, and also a LOT cheaper!
If there is anything that most people would agree is hindering Ether being the singular world standard, it is what happens to gas fees when the network is particularly busy. If great things are happening in the market, you simply want the coin's network to operate really fast and cheap. You can't have volume and liquidity if there is a significant bottleneck in either of these areas. You think traffic can be bad downtown L.A., it ain't nuthin' compared to a bad crypto back-up on the interstate of the world wide web, yo!
Faster transactions, lower fees... that is the biggest thing people truly care about.
Security... that is an assumed, primary requirement for all of this. Every time there is a hack or an on-chain attack or any sort, people scare very quickly, and then they calm down, read about the facts, and eventually gain a false sense of comfort that things will be fine here forward. The truth is, there are brilliant programmers dealing with issues of safety and security around the clock. There are things dealing with the world's financial future in their hands, and that is a scary thing since all of this is extremely experimental. There is so much unknown, and things of this nature tend to be learned through a process of experiences, tweaks and improvements. Patching things up along the way so the boat don't sink tends to be how we discover issues and fix them. It's just, we prefer that to have less of a direct impact on our own money.
Security may be completely interlinked with scale. You can have numerous fast-fix solutions with layer 2 that open protocols to attacks of various kinds, but most people are eager to let loose the dams of L2 because of cost and scale. When security can be included and neither of these qualities compromised, we will see a stronger, better, more future-proof Ether.
And finally, sustainability. This is less of an interest to me... well, that isn't true. I take a great measure of interest in sustainability, I just don't think it is the accurately stated issue that many have been told it is. Government and corporate waste of resources needs to be improved. Will it ever be, or will we just follow the narratives from one resource to the next? Hard to say, but history says there is never a shortage of verbeage that sells policy as if it is moral code, and in this case, the lessons of Bitcoin's wasteful energy spending habits may or may not be based in reality... at all, really. The truth is, that there are untapped natural solutions to energy use that we would never, ever, ever outgrow if used properly. I have zero doubt that the earth and our system provide every solution needed for energy, from the natural movement of waves in the ocean to the sun shining down from the sky, and yes the finite AND cyclical resources above and below ground. The fact that it takes a lot of energy to mine Bitcoin does not necessarily mean it is an energy problem, but it means it requires good management of resources. From cost to location to improving the actual chips according to Moore's law, all of these issues can be made non-issues, and resolving them instead of steering away from consumption might be the best path.
But, as it pertains to Eth2.0, sustainability means a shift towards staking, and I'm not necessarily a big fan of that either (Ether?). Okay, I DO get it, but we will always have a debate of the true nature of cryptocurrency... in fact, that is my next post! If we are talking the evils of centralization, then one has to ask... was there one Satoshi or many? Who is actually in control of Bitcoin? Anyone? Is it truly an autonomous network of equal-footed computers spread across the globe, or do we see centralization of power? Is a democracy truly the most liberating way to break up centralized power? One might say that democratization is the preferred trojan horse used by authoritarian regimes, to trick the people into thinking they are voting for their own freedom, while actually tricking them with only options that limit their own powers. Staking, by its nature, requires a person to invest in a product in order to own a voice in its pathway. If you have to spend to be heard, or spend in order to add value, then you are only as important as your pocket. Isn't that the reason we don't like centralization? If the big bad fiat world is run by powerful and wealthy folks at the top, then wouldn't their preferred form of payment be something that only they would ever own a majority of? Something to think about.
So, there is PoW and PoS, and both have merit, and both have intentions, and both seem to be working at the top of the food chain, but my question for all of this comes around to whether the changes in Eth2.0 will position Ether to grow, scale, and remain competitive the closer and closer Bitcoin and Litecoin come to their economic theories of a finite supply. Nobody knows, but I am infinitely interested to see the effect it all has.
I believe Ether is a fascinating, genius invention and hope well for its future. It is a different model, and now it is the envy of numerous other copy-cats that may deal with cost and scale in better ways than what Ethereum has designed, or they may just not have run into the same issues of scale quite yet.
In the end, my question is worth repeating as months and years wear on. Thus far, Ether is doing well. Slow and steady is a smart move for their upgrades and updates. I'm hopeful and on board for the changes they make. We will all wait and see what happens, and if it is anything like the past year, it is going to be something to watch!
And on that note, Crypto Gordon Freeman... out.
